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Netflix beats, yield curve inversion worries

Oct 19, 2022
3 min read
Table of Contents

    Show me the money

    Netflix shares jumped more than 14% in after-hours trading after it hit 2.4m net subscriber adds in the third quarter, above the guidance offered by the company. But this was in line with analyst expectations – and at the lower end. The company anticipates growing subs by around 4m this quarter from 223m to 227m. Meanwhile Netflix wants to stop giving guidance on subscriber additions and focus on the money. Management don’t expect much spin down to the cheaper ad steam service. Earnings per share hit $3.10 vs $2.13 expected.

    Goldman Sachs

    Shares in GS followed the positive mood from the big banks this season. Profits fell 43% but topped estimates as the company announced its second major restructuring in four years. EPS at $8.25 beat expectations for $7.69. Revenue fell 12% to $11.98 billion, though again above consensus estimates. Investment banking revenues plunged, and equity trading revenues fell, too, though fixed income was a bright spot with a 41% jump. The company’s four main divisions will be restructured into three - Asset & Wealth Management, Global Banking & Markets, and Platform Solutions. Marcus, the retail bit, will be part of the larger Asset & Wealth division – no longer chasing costly new customers “on a mass scale”. 

    United Airlines 

    Strong demand, rising costs but keeping control with capacity at 90% of 2019 levels. Keeping supply suppressed helped revenue per available seat mile was up 25% from three years ago. Shares in United Airlines rose 7% in the after-hours trading. 

    UK inflation up

    Sterling fell in early trade as UK inflation jumped to a 40-year again in September. CPI rose by 10.1% from +9.9% in August and above the 10.0% consensus forecast. The core reading rose to +6.5% from +6.3%. It just heaps more pressure on the government as it tries to wrestle with the ‘cost of living’ crisis. It also increases the chance the Bank of England goes ahead with ‘forceful’ rate hikes – 100bps in November perhaps.  

    Because I was inverted

    The inversion of the 10yr Treasury yield and 3-month is a pretty good predictor of a recession. Yesterday it inverted for the first time since 2020 with the 3mo yield 3bps higher than the 10yr.  The last eight recessions in the US were all predicted by this 3mo/10yr inversion.


    Risk Warning: this article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform.When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice. Trading cryptocurrency CFDs and spread bets is restricted for all UK retail clients. 

    Neil Wilson
    Written by
    Neil Wilson
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